Why cyber security matters

The full reading behind my Short: for ordinary people, for businesses, and in the AI era, plus what analysts say about the sector. Not financial advice.

Why it matters: the figures

Your email, banking and social media logins are valuable to criminals, and online crime is now counted in tens of billions of dollars a year. It affects ordinary people and businesses of every size.

$20.9bnlosses reported to the FBI's IC3 in 2025, up 26%, from just over 1 million complaints [2]
$4.99mglobal average cost of a data breach, a record (IBM, 2026) [1]
1 in 4malicious breaches were AI-enabled, costing about $6m on average [1]
43%of UK businesses had a cyber breach or attack in the past 12 months [3]
  • People: people aged over 60 reported about $7.7bn of losses to the FBI in 2025, up 37%. Phishing/spoofing, extortion and investment scams were among the most reported crimes [2].
  • Businesses: in the UK, phishing was the most common type of breach (38% of businesses) and the one most often named as most disruptive. Only 47% of businesses use two-factor authentication and 19% trained staff [3]. Most incidents cost little, but a minority are very costly [3].
  • Caveats: FBI figures cover only crimes reported to it, mostly in the US. IBM's study covers 602 organisations with breaches between March 2025 and February 2026 [1][2].

AI and new threats

IBM found that one in four malicious breaches in its 2026 study were AI-enabled, up 56%, costing about $6m on average [1]. The FBI's 2025 report included an AI section for the first time: 22,364 complaints and nearly $893m in losses [2].

AI also helps defenders: IBM reports that organisations making heavy use of security AI and automation saved about $1.93m per breach [4]. See also my AI & crypto reading.

Watch the Short

YouTube X Facebook Instagram TikTok

About this page

The Short uses my own animation only: no logos or likenesses. Quotes are verbatim and credited with dates and links. I don't recommend any company, stock or coin. Disclosure: I hold some NEAR. Not financial advice.

A real example: the NEAR Intents hack

Even big, well-funded projects get hit. What matters is how fast they spot it and respond.

  • What happened: between 30 September and 1 October 2026, about $3.8m (3,865,031 USDT on BNB Chain) was withdrawn from NEAR Intents through what the team described as "a bug in the Omni deposit and withdrawal infrastructure interaction with NEAR Intents smart contract" [7][8].
  • Response: the activity was caught by the project's monitoring, services were paused, and co-founder Illia Polosukhin said the issue was fixed within an hour. The core service resumed on 1 October, with deposits and withdrawals on some networks restricted for longer. The team said the NEAR blockchain itself was not affected and promised users full compensation [8][9].
  • Outcome: on 2 October, NEAR Intents general manager Alex Shevchenko said: "The funds from the $3.8M NEAR Intents hack were sent back in full," and "We are stopping the investigation" [7].
  • The lesson: monitoring, a fast pause and clear communication limited the damage. This is a security example, not a comment on NEAR as an investment. Disclosure: I hold some NEAR. Not financial advice.

Practical steps

For individuals

  • Protect your email first with a strong password you don't use anywhere else; "three random words" works well [10].
  • Turn on 2-step verification (also called MFA) for email, banking and social media [10][11].
  • Use a password manager so every account gets a unique password [10][11].
  • Install updates on phones, computers and apps promptly [10][11].
  • Pause on urgent messages. Learn to recognise and report phishing; don't click links in unexpected messages [11].
  • Back up important photos and files [10].

For small businesses

  • Turn on two-factor authentication for every staff account: fewer than half of UK businesses do [3].
  • Give staff short, regular phishing awareness training: only 19% of UK businesses did [3].
  • Keep devices and software updated and keep tested backups [10][11].
  • Have a plan to spot and pause problems fast. The NEAR example shows how much speed matters [8].

What analysts say about investing in cyber security

This section reports what named analysts have said about the sector in general. It is not a recommendation to buy or sell anything. Not financial advice.

Spending: Gartner

Gartner forecast worldwide end-user spending on information security at $213bn in 2025 and $240bn in 2026, up 12.5% [5]. Ruggero Contu, Senior Director Analyst: "Established security spending will continue as normal, but some organizations are being more cautious with any new security spending in this highly uncertain and challenging climate." He added: "However, higher defense budgets, rising threats, increasing regulatory pressure and better cybersecurity awareness – especially among small and medium-sized businesses – will keep cybersecurity spending strong in the medium to long term." (29 Jul 2025) [5]

Bullish: Dan Ives (Yorkville Ives)

"Agentic AI has expanded the attack surface faster than budgets, and the frontier labs have moved inside the security stack, which we expect to lift security from roughly 5% of IT budgets toward 10% the next 3 years," and "Cybersecurity stocks are, I believe, still in the early days of just a massive growth cycle." (CNBC, 7 Oct 2026) [6]

Constructive: Tal Liani (Bank of America)

"We believe the market is increasingly pricing in a step-function increase in cyber risk, supporting both higher security spending and a more constructive valuation framework across the sector." He called cyber security "a mega-theme and enabler of the AI era". (Note of 18 Sep 2026, reported Sept 2026) [12]

Cautious: Peter Weed (Bernstein)

"Cybersecurity may have gotten over its skis." In a 17 Sep 2026 note he wrote that "implicit in the sector stock prices seem to be a degree of acceleration that could rival consumption software like hyperscaler compute or databases" [12].

Risks: Brad Long (Wealthspire)

"If you're looking to get in now, you have to recognise that what you're paying reflects the expectation that everything will be perfect in the future," and "The tailwinds for cybersecurity are obvious, but if we see any weakness — if the AI capex cycle slows, or even if we stop seeing so many sophisticated AI attacks — then their revenue could slow and the stocks could sell off materially." [12]

  • Valuations: the same report noted that a Goldman Sachs basket of cyber security stocks had more than doubled since 10 April 2026, and that some leading names trade at very high multiples of expected earnings [12]. High expectations can mean big falls if growth disappoints.
  • Balance: strong demand for security does not guarantee good investment returns. Prices already reflect a lot of optimism, according to the cautious analysts above.

Not financial advice

This page is general information and education only. It is not financial advice and not a recommendation to buy, sell or hold any stock, fund or crypto asset. Analysts' views are quoted for context; no price targets are given. Do your own research and consider a regulated financial adviser. Disclosure: I hold some NEAR. Not financial advice.

Full narration (transcript)

Your password could be worth more to a criminal than you think. Americans reported nearly 21 billion dollars lost to online crime last year. IBM puts the average cost of a data breach at a record, almost 5 million dollars. Even big projects get hit. NEAR Intents lost 3.8 million dollars, patched it fast, and says it got it all back. Analysts expect security spending to stay strong, though some warn the stocks look pricey. So turn on two-step verification, use a password manager, and pause on urgent messages.

Sources

  1. [1] IBM (29 Jul 2026). "IBM Study: One in Four Malicious Breaches are AI-Enabled, Costing Companies $6 Million on Average." IBM Newsroom · Cost of a Data Breach report
  2. [2] FBI (6 Apr 2026). "Cryptocurrency and AI Scams Bilk Americans of Billions" and IC3 2025 Internet Crime Report. Press release · PDF
  3. [3] UK Government (30 Apr 2026). Cyber Security Breaches Survey 2025/2026. gov.uk
  4. [4] Kessem L. (2026). 2026 Cost of a Data Breach: AI adversaries and enterprise risk. IBM X-Force. IBM
  5. [5] Gartner (29 Jul 2025). "Gartner Forecasts Worldwide End-User Spending on Information Security to Total $213 Billion US Dollars in 2025." Gartner
  6. [6] Burns T. (7 Oct 2026). Dan Ives says AI buildout only in 3rd inning. CNBC. CNBC
  7. [7] Unchained (Oct 2026). NEAR Intents says exploited $3.8 million is back, closes its hack investigation. Unchained
  8. [8] crypto.news (Oct 2026). NEAR Intents resumes service after $3.8M exploit. crypto.news · PublicAML: NEAR Intents hack
  9. [9] TokenPost (8 Oct 2026). NEAR Intents hack follow-up. TokenPost
  10. [10] UK National Cyber Security Centre. Cyber Aware. ncsc.gov.uk
  11. [11] US Cybersecurity and Infrastructure Security Agency. Secure Our World. cisa.gov
  12. [12] The Edge Malaysia (Sept 2026), syndicated report citing Bloomberg data: analyst views on cyber security valuations. The Edge Malaysia

Credits

Video and images: own animation (padlocks, charts and icons are illustrations). Quotes are verbatim and credited to their speakers.

Back to home